Summary of District Opportunity to Purchase Act (DOPA) D.C. Department of Housing & Community Development DOPA Working Group Presented to the District of Columbia Housing Preservation Strike Force Friday, November 13, 2015 DOPA Summary The District’s Opportunity to Purchase Amendment Act of 2008 (DOPA) (D.C. Law 17 ‐ 386, effective Dec. 24, 2008 codified at § 42 ‐ 3404.31 et seq.) became effective on December 24, 2008. An underlying purpose of the legislation furthers a stated legislative objective of the Rental Housing Conversion and Sale Act of 1980 (the sale provisions codified at § 42 ‐ 3404.01 et seq. known as the Tenant Opportunity to Purchase Act of 1980 or TOPA) (D.C. Official Code 2001 ed., as amended, § 42 ‐ 3401.01 et seq.), which aims to “preserve rental housing which can be afforded by lower income tenants in the District.” TOPA § 42 ‐ 3401.01(2). DOPA empowers the Mayor with the right to purchase housing accommodations 1 consisting of 5 or more rental units and which 25% of the rental units are deemed as “affordable units.” 2 The District’s right to purchase is subordinate to the tenant right to purchase. DOPA requires that the rental units be maintained as affordable units, and that the Mayor undertake affirmative measures to increase the number of affordable units in the housing accommodation. The Mayor may assign her opportunity to purchase provided that the DOPA assignee has a “demonstrated” capacity to own and manage the housing accommodation, and agrees to abide by DOPA’s affordability requirements set out in DOPA § 42 ‐ 3404.33. DOPA Timeframes 1 A “Housing Accommodation” or “accommodation” is defined by § 42 ‐ 3401.03(11) of TOPA “as a structure in the District of Columbia containing 1 or more rental units and the appurtenant land. The term does not include a hotel, motel, or other structure used primarily for transient occupancy and in which at least 60 percent of the rooms devoted to living quarters for tenants or guests are used for transient occupancy if the owner or other person or entity entitled to receive rents is subject to the sales tax imposed by § 47 ‐ 2001(n)(1)(C) and the occupant of the rental unit has been in occupancy for less than 15 days. 2 An “Affordable Unit” is defined as “a rental unit in a housing accommodation for which the existing monthly rent, including utilities, paid by the tenant is equal to or less than 30% of the monthly income of a household with an income of 50% of the area median income, as set forth in the periodic calculation provided by the United States Department of Housing and Urban Development, adjusted for the household size.” 1
The timeframes for DOPA (and TOPA) are illustrated in Exhibit 1. The D.C. Department of Housing and Community Development (DHCD), Rental Conversion & Sale Division (CASD) receives TOPA offer of sale notices and DOPA offer of sale notices (DOPA notice). 3 Offer Period : The owner must provide a written DOPA notice to the Mayor in the form of a letter, and attach a copy of a current tenant ‐ rent roll, and a copy of the TOPA notice served on tenants. To exercise the right to purchase, the Mayor must provide the owner with a written statement within 30 days of receiving the DOPA notice. Negotiation Period : The Mayor has 150 days from the date of the owner’s receipt of the Mayor’s written response to negotiate a sale contract. The Mayor’s negotiation period may be extended under certain circumstances: (1) by 15 days if the tenants express an interest in purchasing the accommodation by forming and registering a tenant organization; (2) if the owner grants an extension of time to tenants, then Mayor automatically receives the same extension; or (3) if the owner delays in providing financial and operational information, 4 then the Mayor’s negotiation period is extended one day for every day of delay by the owner. Settlement Period : Once the owner and the Mayor ratify a sale contract, the Mayor has 60 days to consummate settlement. DOPA Affordability The DHCD DOPA Fact Sheet 5 discussed affordability under DOPA, attached as Exhibit 2. If the Mayor exercises the right to purchase then the Mayor (or Mayor’s assignee) must maintain affordable rents. § 42 ‐ 3404.33(b)(1). Tenants must receive written notice of the method of calculating household income and rent, and the Rent Administrator shall consider tenant petitions challenging rent or household income 3 The owner serves the District by letter to the attention of the DHCD CASD administrator. The DOPA notice must include: the asking price and material terms of sale; a statement whether there is a ratified third party contract and that a copy shall be provided to the District within 7 ‐ days of the District’s request; a list of vacant units, tenant roll, and rent roll; a list of affordable units and current rent charged for each unit; and a statement that within 7 ‐ days upon receiving a request, the housing provider will provide a copy of accommodation floor plans (if available), utility consumption rates, capital expenditures, and rent rolls for the preceding two years to the District. 4 E.g., a copy of accommodation floor plans, utility consumption rates, capital expenditures, and rent rolls for the preceding two years. 5 The DOPA fact sheet gives guidance for determining whether units are affordable and therefore subject to DOPA, and outlines the DOPA process (available at http://dhcd.dc.gov/publication/2013 ‐ district ‐ opportunity ‐ purchase ‐ act ‐ dopa). 2
calculations. § 42 ‐ 3404.33(b)(4). Rent increases are limited to no more than 10% per year. The Mayor may impose income restrictions (however, existing tenants are “grandfathered”). Any unit that is already an affordable unit, at the time the Mayor exercises DOPA rights must remain an affordable unit, and any vacant units must be filled and maintained as affordable units, divided among households with differing affordability levels. See§ 42 ‐ 3404.33(c). Further, the Mayor (or Mayor’s assignee) must develop an affordability plan to determine whether the number of affordable units may be increased. See§ 42 ‐ 3404.33(d). Draft Regulations Issuance DHCD is working internally on draft regulations and plans to complete and publish regulations by February 2016. Proposed DOPA Criteria The DOPA Working Group researched multiple jurisdictions for affordable housing legislation, regulation, and criteria. After extensive analysis, examination and debate we agreed upon the factors listed below called a Ten Point Criteria as those likely to assist with the successful selection of properties for purchase and the exercise of DOPA rights. We propose that for any single building being considered for a DOPA purchase, that the building satisfy at least three of the criteria. When considering multiple buildings contemporaneously, buildings will be listed in order of priority based upon the total number of criteria satisfied. The higher the number of criteria satisfied the higher of a priority the given building is designated. The highest priority designation any given building can obtain is ten based upon satisfying all 10 selection criteria. Because priorities naturally shift over time, the criteria themselves are not weighted or listed in order of priority. Ten Point Selection Criteria for Prioritizing Selection of Building(s) for DOPA Purchase : 1. High Municipal Debt impacting the Average Cost per Unit 2. Geographic Priority Is Building in a “Mayor’s Target Area” or” Municipal Priority Area” Is Building in an area that would benefit from residential or income diversity? 3. Neglected Building Maintenance / Excessive Code Violations [consult with Strike Force to recommend a number or rate of housing code violations] 4. High Vacancy Rates Vacancy rates of 15% or greater of available units These buildings may help reduce homelessness in the District 5. Expiring Housing Assistance Program (“HAP”) Contract [consult with Strike Force to recommend an expiration timeframe; the HAP contract is within months of expiration] 6. Expiring Low Income Housing Tax Credits (“LIHTC”) 3
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